Jeremy Corbyn. The party’s intervention in Labour-run Haringey council resulted in the resignation of its chief executive.
Photograph: Wiktor Szymanowicz/Barcroft Images

Jeremy Corbyn is to promise to bring back “municipal socialism” to the UK, while defending Labour’s decision to ask one of its local councils to halt a controversial public-private housing scheme.

In a speech to party councillors on Saturday, the Labour leader will say it is crucial for local authorities to reverse the privatisation of public services, pointing to cases where councils are already “taking measures to bring services back in-house and reject costly PFI-style models”.

Q&A

What are PFI and PFI2?

Private finance initiative deals were introduced in 1992 under John Major but became widespread under Tony Blair. Typically used for public buildings and infrastructure, PFI schemes introduce private investors into the design, building, finance and operation of new facilities which are then rented back by the state.

Why did it become widespread?

PFI allowed ministers to build schools and hospitals with minimal upfront costs to the Treasury. It was a way to commission popular projects without immediately hitting the public purse.

Firms that have built NHS hospitals using PFI deals have made pre-tax profits of £831m over the past six years, according to the Centre for Health and the Public Interest. Firms such as Carillion, Interserve and Kier Group are among the big players.

What is PFI2?

Created in 2010 by George Osborne, PFI2 aimed to cut long-term taxpayer liabilities and trim excessive profits. In essence, it is meant to be “less private and more public”, with the state taking stakes of up to 49%. A board is appointed and annual accounts printed. It cuts back on bank financing (from 90% to 80%), improves transparency and accountability, and speeds up procurement to cut costs. PFI2 deals aim to be smaller, dealing more with facilities and services, rather than building. The government calls it PF2, not PFI2.

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He will say this is happening at a time when the “whole edifice of the ‘private good, public bad’ dogma has crumbled” and Labour councils are leading the way in protecting the public from austerity.

“With amazing creativity in the toughest of times, we are seeing the first shoots of the renaissance of local government for the many, not the few – the rebirth of municipal socialism,” Corbyn is to say.

He is then expected to defend the party executive’s unanimous decision to ask Labour-run Haringey council to reconsider its decision to introduce a controversial private-public housing scheme. The furore resulted in the resignation of the council’s leader, Claire Kober, who accused some of her critics of intimidation and bullying.

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At the speech in Nottingham, Corbyn will suggest this intervention was a one-off in exceptional circumstances, after the decision led to concern among other elected council leaders about the national executive committee (NEC) getting too involved in local policy.

“It has been a unique situation, which is why the NEC unanimously asked the council leadership to put their plans on hold and take part in a mediation process – to bring everyone together,” he will say.

“Because when we bring people together and listen to everyone’s voices, we make better decisions. Democracy creates better outcomes for communities … Regeneration must put local people first, not property speculators. That’s why Labour is committed to giving residents the right to a ballot across the country so that when we’re in government we can deliver real regeneration for the many, not the few.”

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The scheme, known as the Haringey Development Vehicle (HDV), was approved in July by the council, which has promised to replace existing council houses and rehouse current tenants. Kober’s successor will now decide whether to abandon the scheme.

Its critics say the HDV would bulldoze existing council estates without effective guarantees that existing tenants would be able to return, and puts billions of pounds of public assets partially into private hands.

The scheme has been extremely divisive in the local party, leading to the deselection of several Labour councillors who supported the project. Two local MPs, David Lammy and Catherine West, have also expressed concerns about the scheme.

However, some within Labour were also outraged by the NEC’s decision to intervene in local politics. Last weekend, the leaders of over 70 councils, including Manchester, Birmingham, Newcastle and many London boroughs, said the actions of the NEC were “dangerous and alarming”, “uncomradely and disrespectful” and “an affront to the basic principles of democracy”.

• This article was amended on 4 February 2018. An earlier version incorrectly referred to Claire Kober as Haringey’s chief executive. Kober was the leader of the council.